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Maxygen Reports Fourth Quarter and Year End 2007 Financial Results
Date:2/12/2008

REDWOOD CITY, Calif., Feb. 12 /PRNewswire-FirstCall/ . Maxygen, Inc. (Nasdaq: MAXY), a biotechnology company focused on the development of improved protein drugs, today reported financial results for the fourth quarter and year ended December 31, 2007. At December 31, 2007, cash, cash equivalents and marketable securities totaled $145.8 million compared to $182.9 million at December 31, 2006.

"After a productive year for MAXY-G34 in the clinic, we enter 2008 in a solid cash position," said Russell Howard, Ph.D., chief executive officer of Maxygen. "With consolidation of our operations almost complete and our ongoing cash utilization streamlined, we are well positioned to focus our resources on continued advancement of our two lead programs, MAXY-G34 for neutropenia and MAXY-VII for hemophilia."

Fourth Quarter Results

For the fourth quarter of 2007, Maxygen reported a net loss of $11.3 million, or $0.31 per share, compared to net income of $8.3 million, or $0.23 per share, in the fourth quarter of 2006. Fourth quarter 2006 results were substantially impacted by a $17.7 million gain on the sale of Maxygen's equity interest in Avidia, which was acquired by Amgen in October 2006. Fourth quarter 2007 results reflect the recognition of $7.7 million of related party revenue from Maxygen's license agreement with Codexis related to biofuels. The Codexis revenue was partially offset by $5.2 million of restructuring charges associated with the closure of Maxygen's Denmark facility as announced in November 2007.

Revenue for the fourth quarter 2007 was $11.0 million, an increase of $4.5 million compared to the fourth quarter 2006. The increase was primarily due to the aforementioned $7.7 million related party revenue, and is offset in part by the loss of revenues from Maxygen's collaboration with Roche to develop a Factor VIIa for acute bleeding conditions. That collaboration ended in the second quarter of 2007.

Expenses for the fourth quarter 2007 were $23.7 million, an increase of $5.4 million compared to the fourth quarter 2006. This increase was primarily due to the restructuring charges related to the Denmark facility closure.

Full Year 2007 Results

Maxygen reported a net loss of $49.3 million, or $1.34 per share, for the year ended December 31, 2007, as compared to a net loss of $16.5 million, or $0.46 per share, for the prior year.

Excluding the impact of SFAS 123(R), Maxygen reported a non-GAAP net loss of approximately $42.8 million, or $1.16 per basic and diluted share, in 2007. In 2006, excluding the impact of SFAS 123(R) and the gain on sale of equity investment, Maxygen reported a non-GAAP net loss of approximately $27.4 million, or $0.76 per basic and diluted share.

Conference Call

Maxygen will host a conference call today to discuss fourth quarter and 2007 financial results at 11:30 a.m. ET (8:30 a.m. PT). Participants in the U.S. can access the call by dialing 866.825.3209 and using the passcode 31366535. International participants can dial 617.213.8061 and use the same passcode. A live webcast of the conference call will be available at http://www.maxygen.com/webcasts.

A telephone replay of the conference call will be available until March 12, 2008. To access the replay, please call 888.286.8010 (U.S.) or 617.801.6888 (international) and use the passcode 60709469. An archived version of the webcast will be available until March 12, 2008 at http://www.maxygen.com/webcasts.

About Maxygen

Maxygen is a biopharmaceutical company focused on developing improved versions of protein drugs. The company's lead program, MAXY-G34, is designed to be an improved version of PEG-GCSF for the treatment of neutropenia. MAXY-G34 is currently in Phase II clinical trials. Also in Maxygen's pipeline is a new Factor VIIa product candidate for the treatment of hemophilia and new CTLA4-Ig product candidates for the treatment of rheumatoid arthritis. Maxygen uses its proprietary DNA shuffling technology and extensive protein modification expertise to pursue the creation of biosuperior proteins. http://www.maxygen.com

Forward-Looking Statements

This news release contains forward-looking statements about our research and business prospects, including those relating to our ability to develop any human therapeutic products suitable for commercialization; our ability or plans to commence or continue the preclinical or clinical development of any of our product candidates, including MAXY-G34 and MAXY-VII, and the timing and status of any such development; the status of the consolidation of our operations and the impact of such consolidation on our cash utilization and financial position; and our liquidity and future financial performance, including the adequacy of our current cash resources and other assets to fund our future operations and/or for future capital requirements. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Among other things these risks and uncertainties include, but are not limited to, changing research and business priorities, the inherent uncertainties of pharmaceutical research and drug development, our ability to develop human therapeutic drugs in an increasingly competitive biotechnology industry and the uncertain timing of such development, the development of superior products by competitors, and our ability to establish and maintain our research and commercialization collaborations and manufacturing arrangements. These and other risk factors are more fully discussed in our Form 10-K for the year ended December 31, 2006, including under the caption "Risk Factors", and in our other periodic SEC reports, all of which are available from Maxygen at http://www.maxygen.com. Maxygen disclaims any obligation to update or revise any forward-looking statement contained in this release as a result of new information or future events or developments.

Selected Consolidated Financial Information

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

Three Months Ended Twelve Months Ended

December 31, December 31,

2007 2006 2007 2006

(unaudited) (unaudited) (Note 1)

Revenues:

Collaborative research and

development revenue $1,756 $5,326 $10,232 $20,544

Revenue from related party 7,696 -- 8,286 --

Grant revenue 1,529 1,184 4,639 4,477

Total revenues 10,981 6,510 23,157 25,021

Expenses:

Research and development 15,338 13,636 59,851 49,130

General and administrative 3,141 4,629 14,951 17,559

Restructuring charges 5,212 -- 5,212 --

Total operating expenses 23,691 18,265 80,014 66,689

Loss from operations (12,710)(11,755) (56,857) (41,668)

Interest income and other

(expense), net 1,436 2,433 7,542 8,524

Equity in net losses of minority

interests -- -- -- (1,000)

Gain on sale of equity investment -- 17,662 -- 17,662

Net income/(loss) $(11,274) $8,340 $(49,315) (16,482)

Basic and diluted net income/(loss)

per share $(0.31) $0.23 $(1.34) $(0.46)

Shares used in computing basic and

diluted net income/(loss) per

share 36,898 36,109 36,787 36,046

Condensed Consolidated Balance Sheets

(in thousands)

December 31, December 31,

2007 2006

(unaudited) (Note 1)

Cash, cash equivalents and marketable

securities $145,813 $182,876

Receivables, prepaid and other assets 11,644 7,317

Property and equipment, net 3,060 3,262

Goodwill and other intangibles, net 12,192 12,192

Total assets $172,709 $205,647

Other liabilities $14,802 $10,255

Total deferred revenue -- 5,593

Restructuring liabilities 4,413 --

Stockholders' equity 153,494 189,799

Total liabilities and stockholders' equity $172,709 $205,647

Footnotes

(A) Reconciliation of GAAP and non-GAAP net income/(loss) and net

income/(loss) per share (in thousands, except per share amounts)

Three Months Ended Twelve Months Ended

December 31, December 31,

2007 2006 2007 2006

(unaudited) (unaudited)

Net income/(loss) $(11,274) $8,340 $(49,315) $(16,482)

Stock compensation expense 1,318 1,793 6,550 6,743

Gain on sale of equity

investment -- (17,662) -- (17,662)

Non-GAAP net income/(loss) $(9,956) $(7,529) $(42,765) $(27,401)

Shares used in computing

Non-GAAP basic and diluted

net income/(loss) per share 36,898 36,109 36,787 36,046

Non-GAAP basic and diluted net

income/(loss) per share $(0.27) $(0.21) $(1.16) $(0.76)

Note 1: Derived from consolidated audited financial statements as of

December 31, 2006.


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